Swiss bank UBS has suspended dealing in its $6 billion Wealth Management Global Property fund, saying the fund will remain closed until the end of 2009.

The bank said the decision to freeze the Jersey-based fund was taken “in the best interest of all investors” amid a hike in redemption requests.

"Due to the strained liquidity situation in the market as a whole and the longer process for selling real estate, the fund can no longer handle all redemption requests without forcing remaining investors to suffer losses from emergency sales," a spokesperson for UBS said.

The Global Property fund, which was offered to the bank’s wealth management clients accounted for between 2 and 7 per cent of the client assets managed by UBS on a discretionary basis.

In the third quarter UBS reported outflows of SFr49.3 billion ($41.72 billion) from its global wealth management and business banking operations, although outflows have subsequently slowed. 

In November, Morgan Stanley analysts cut their earning forecasts for UBS, predicting an earnings-per-share for UBS of SFr1.41 ($1.16) for 2009, rising to SFr2.02 in 2010. It expects UBS to make a net profit, attributable to shareholders, of SFr3.2 billion next year.

Morgan Stanley previously forecast EPS of SFr1.83 for 2009.

In the wealth management arm, Morgan Stanley said UBS will suffer SFr77 billion of outflows next year, across all segments of that business division, and outflows of SFr65 billion from the UBS asset management operation.

The suspension of UBS’ Global Property fund closely follows news last week that troubled New Star Asset Management has frozen its $43.3 million Heart of Africa fund due to increased redemptions and weakened liquidity in the sub-Saharan markets.